Microsoft’s explanation included a sharp warning that U.S. visa caps preclude the company from hiring the workers it needs at its U.S. locations. New hires recruited by Microsoft but denied H-1B visas can take positions in Vancouver; current Microsoft employees with expiring H-1B visas can relocate across the border in Canada.
Microsoft’s Vancouver move underscores the untenable position companies face in trying to recruit top talent for their U.S. facilities.
"It’s rare for any company to stand up and point to one factor that caused it to make a large business decision," notes Bonnie Gibson, managing shareholder of Littler Mendelson’s global corporate migration law group in Phoenix. "But the immigration issue and the skilled labor availability problem is now a factor in business considerations at many companies."
Few companies can adopt Microsoft’s solution to the U.S. H-1B shortage, however.
"Shifting facilities across borders is an expensive business move that is only suitable for large companies that need to have a physical team in place," says Frieda Glucoft, partner and chair of the immigration and naturalization practice at Mitchell Silberberg & Knupp in Los Angeles.
She warns, however, that the U.S. may see more companies shifting work outside the borders.
"How to plan for recruiting foreign workers in 2008 is the million-dollar question for employers," Glucoft says. "H-1Bs will be a lottery again, and the number of applications will be even higher than in 2007. We are recommending various approaches, but they are expensive and some don’t work."
Glucoft and other immigration experts advise recruiters to look at specific techniques for maximizing the utility of H-1Bs and to explore alternative visas for skilled workers.
When recruiters face shortages for skilled labor, they turn first to foreign-born MA and Ph.D. graduates from U.S. universities, but the volatility of the immigration issue erases any distinction between students already living in the U.S. and foreign workers coming in from abroad.
"Politically, there is no understanding that we are talking about employers’ ability to hire these graduates," Gibson says.
The H-1B problem flows into this issue because postgraduates are allowed only one year of employment under current law and then have to move to H-1B status.
"There is legislative activity around this issue, but the current political environment in the United States is toxic," Gibson notes.
"Employers may find some relief in 2008 if the Department of Homeland Security looks at areas where it could make changes at the margins without statutory amendments," Gibson says. "The one-year limit on employment for postgraduates is one possibility. The point is to take pressure off the H-1Bs. It is critical for companies to push for this."
Gibson advises HR executives and recruiters to develop a solid strategy that allows the company to identify which candidates the company will sponsor for H-1Bs early on. She also stresses the importance of looking at December graduates rather than May graduates because H-1B applications can only be flied after all the pre-requisites for graduation have been completed.
Companies can hire May graduates for only one year, but can’t file for H-1Bs until the next April for work beginning in October, so May graduates are caught in a period when they are not authorized to work. December graduates can move from their F-1 status during their one year of employment to H-1B status without entering a period when they are not authorized to work.
Also, recruiters can focus on lateral recruiting that targets current H-1B holders who are not counted against the cap.
"Lateral recruiting is now extremely active," Gibson says.
Betsy Stelle Morgan, partner at Baker & McKenzie in Chicago, advises recruiters to analyze each skill set needed and consider rotating F-1 employees out to their home country or to Mexico or Canada with the hope that they can return in October under an H-1B. Alternatively, F-1 status employees caught in the gap period that occurs when their visa expires in May can pursue additional academic courses and continue their student status until H-1B status is achieved.
"Each situation has to be analyzed on its own merits," Morgan says. "There is no expectation for a H-1B cap increase, so recruiters must plan now, beginning with an audit of the workforce for F-1 status employees who may be eligible for H-1Bs."
A 2007 modification in the H-1B visa rules allows H-1B visa holders to retain their status after they leave the U.S. and creates a new opening for recruiters looking for foreign nationals.
"This is a nice break for employers, but it has been underutilized because both employers and foreign nationals are often not aware of the 2007 change," says Irina Plumlee, partner at Gardere Wynne Sewell, Dallas.
Recruiters can now look overseas for workers who hold H-1B visas and did not exhaust their six-year limit. Before the 2007 change, workers with time remaining on their H-1B visas lost it as soon as they left the United States. If a new employer wanted to bring the worker back into the U.S., the employer would have to file for a new H-1B that would be subject to the cap.
Under the 2007 revision, the H-1B visa number stays with the worker even if he or she leaves the U.S. and the worker can re-enter for a new job for the length of time remaining under the original visa.
If an employee working under an H-1B visa for two years loses his job and returns home, for example, a new employer could request restoration of the H-1B and bring that worker into the U.S. for the four years remaining. Also, if a worker with an H-1B visa is no longer employed and returns to school in the U.S. under a student visa, a new employer can hire that worker under the original H-1B visa for the amount of time remaining on it without being subject to the cap.
Glucoft also reminds employers that they can use H-1B extensions to keep the employee in the U.S. for up to eight years, but to move to a green card, the employer must file an application before the employee’s fifth anniversary date.
"We are seeing employers rush to file these," she says. "And we have seen and continue to see a lot of lateral recruiting."
"Traditionally, H-1B visas have been in the center of employers’ attention for skilled workforce needs," Plumlee notes. "However, the current situation calls for a broader outlook and careful consideration of lesser-known work permits, such as the L, E, O and others.
"With comprehensive immigration reform failing in 2007 and our economy strong enough to warrant interest in skilled foreign workers, U.S. employers continue to face significant challenges planning their labor needs and recruitment efforts."
Plumlee advises recruiters to look more closely at O visas for workers with extraordinary abilities. Recruiters and candidates may assume that the O visa is not available because of its language concerning "extraordinary" skills, but it has broader applicability.
"O visas are an excellent alternative to the H-1B," she says. Recruiters and foreign nationals should look carefully at this option and not discount it.
"We look at all the options," Glucoft says. "Recruiters have to work through every possible box, looking at every possible route."
If candidates in professional occupations can qualify for an E visa, recruiters should pursue that option. If the company has an affiliate outside the U.S., it can use inside transfers, which cost much less than filing for an H-1B. If not, employers will have to try for H-1Bs, unless they can qualify under one of the special NAFTA or individual country visas.
"H-2B visas for seasonal workers are capped at 66,000 and closed within 48 hours," Glucoft notes. "Companies in the hospitality industry and other industries that rely on seasonal workers have barraged Congress, so it’s possible that there may be some relief for H-2B visas and returning workers. It’s become a very emotional topic."
Glucoft also advises recruiters to look at J-1 visas for management trainees. "Sometimes recruiters can use these and companies can benefit," she notes. "J-1 visas may have been underutilized and can be useful for positions that require collaboration."
For companies with foreign subsidiaries, Gibson advises recruiters to look at the talent pool and match up the most attractive candidates with the countries where they can get visas.
"Recognize that some of the best candidates will not obtain H-1Bs and make these priority hires at foreign locations," she says.
Without national reform, the U.S. continues to drift away from the global move toward greater labor mobility. Other nations, including Canada and the United Kingdom, now use point systems designed to pull in the most talented workers without an existing job offer.
The U.K. also automatically grants visas to MBA graduates from the world’s top 50 business schools, more than half of which are located in the United States. Unlike these merit-based systems, the U.S. H-1B process is a lottery that increasingly discourages the top candidates from looking for work in the U.S.
"For recruiting skilled labor, there will be much more heavy sledding for H-1Bs and other visas in 2008," Gibson notes. "The government won’t turn back the existing numbers, but it can continue to increase the filing fees. As it becomes more costly and difficult, the U.S. with lose its competitiveness and the best jobs will leave the country."